Jimmy Fallon, Justin Bieber, and Madonna have been sued in a proposed class action that accuses them and other celebrities who promoted the Bored Ape Yacht Club (BAYC) NFTs of fraud.
According to the suit, the celebrities misled their fans into buying the Bored Ape Yacht Club NFTs and other unregistered securities offered by Yuga Labs, to spike their value, convincing them to buy “losing investments at drastically inflated prices.”
“The truth is that the Company’s entire business model relies on using insidious marketing and promotional activities from A-list celebrities that are highly compensated (without disclosing such), to increase demand for the Yuga securities by convincing potential retail investors that the price of these digital assets would appreciate,” Part of the complaint reads. The complaint was filed on Thursday in California federal court.
The suit has also mentioned Stephen Curry, Serena Williams, Snoop Dogg, Post Malone, and Fallons’ production company Electric Hot Dog, Inc. The Weeknd, and Universal Television, among others. The suit claims that the celebrities were recruited by Guy Oseary, a talent manager, who crafted a scheme with Yuga Labs to pay the celebrities for their endorsements through Moonpay, a crypto firm. The complaint also claims that Sound Ventures, Oseary’s venture capital firm, was an early investor in Moonpay.
Oseary has been linked to many of the celebrities who promoted the BAYC Non-Fungible Tokens, including Hart, Bieber, and Paltrow, via their investment in Moonpay. The suit alleges that by raising the demand for BAYC NFTs and ApeCoin tokens, they also increased the demand for Moonpay.
“Oseary, the MoonPay Defendants, and the Promotor Defendants each shared the strong motive to use their influence to artificially create demand for the Yuga securities, which in turn would increase the use of MoonPay’s crypto payment service to handle this new demand,” reads the complaint. “At the same time, Oseary could also use MoonPay to obscure how he paid off his celebrity cohorts for their direct or off-label promotions of the Yuga Financial Products.”
In an episode of The Tonight Show on November 11, 2021, Fallon promoted both the Bored Ape Yacht Club NFTs and Moonpay by stating that he received his first NFT through the firm. Moonpay bills itself as a white-glove service meant to help celebrities purchase digital assets. However, Fallon did not disclose that he had a financial stake in the company.
“Nor did Electric Hot Dog or Universal disclose that this purportedly organic segment on the Tonight Show was, in reality, a paid advertisement for the BAYC collection of NFTs and MoonPay by two celebrities (Fallon and Winkelmann) who are business partners with an investor (Oseary) in both Yuga and MoonPay,” states lawyer John Jasnoch in the complaint.
The Suit names Yuga Labs and Oseary and claims that the promotion convinced investors to purchase the BAYC NFTs.
The suit also claims that each promoter received their digital assets from Yuga Labs or Moonpay for their endorsements.
The complaint comes at a time when the value of NFTs has been adversely affected by the crypto bear market. The BAYC NFTs’ trading volume has dropped by 93 percent from its height during the launch of the collection. The value of the APE tokens has also dropped by 90% from their all-time high.
Responding to the complaint, Yuga Labs has termed the claims as opportunistic and parasitic.
“In our view, these claims are opportunistic and parasitic,” stated a Yuga Labs spokesperson. “We strongly believe that they are without merit, and look forward to proving as much.”
Fallon, Bieber, Paltrow, Universal, and Moonpay have not yet responded to the claims.
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